Advice in times of market volatility

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4 min.

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Economics, inflation and market volatility: what are the best strategies to take? Follow these tips to stay informed as an investor.

Factors that have an impact on market volatility

Firstly, it’s important to understand the factors affecting market volatility. The causes are complicated, but can be grouped into three main points:

Inflation: Rising inflation over a period of time. To curb inflation, central banks are increasing interest rates. This makes borrowing money less attractive, which should slow down the economy.

News: Large-scale health crises and political tensions are examples of factors that can create a climate of uncertainty in the markets. These types of factors have many effects on the job market and on the economy.

Receding optimism: Even when we’re in a favorable environment where markets have been performing well for quite some time, a climate of uncertainty can easily shake investors' high expectations. Combined with a dip in consumer confidence, optimism in the markets is rapidly declining.

Stay calm

What’s an investor’s worst enemy?

Though it’s normal to have concerns, staying calm is always the best strategy for savvy investors. Investors who let their emotions drive them risk entering and exiting the stock market at the wrong times, reducing the return on their investment portfolio.

As illustrated in the chart below, a bull market gives investors enthusiasm and overconfidence and makes them feel like now is the best time to invest further. A bear market, on the other hand, causes fear, panic and despair, and makes investors think about selling everything quickly to save their money. In both cases, if investors let themselves be guided by their emotions, they may see decreased returns or miss out on opportunities for gains.

Assess your personal situation and keep your original goals in mind

The best investment choices depend on a number of factors: family situation, dependants, current financial situation, assets, liquidity needs, risk tolerance, investment knowledge, etc. The amount invested and to be invested, the time you have before you retire and your risk tolerance are the three main factors you should consider.

Investor profiles

Each investor has a different personal situation and a unique investor profile. It’s important to always keep in mind your initial investment goals as well as your investment horizon. This will help you make sure your emotions don’t interfere with your investments.

Avoid the trap of exiting the market too soon

To avoid the risk of an impulsive disbursement, take the time to put your situation in perspective and consider all the advantages of long-term investing.

To better understand the trap of early disbursement, let’s look at this scenario with an investor who invested $10,000 in 1986. By missing the 10 best stock market days of the last 39 years*, he would have $136,467 less in his portfolio in 2025 than if he had left his money invested.

Be curious but stay alert!

Social media is full of content that can influence your beliefs and affect your trust in institutions. So be careful not to fall victim to disinformation. It’s important to get your information from a variety of sources for a more accurate and informed picture of the situation. Be curious and find out which ones speak to you the most!

Read, watch and listen. From organisms, to magazines, newspapers, blogs and podcasts, there are many different platforms where you can find financial and economic news. In a hurry and short on time? Podcasts are becoming more and more popular and offer an easy way to learn while you’re getting things done or during your commute.

Ask for advice

Your financial advisor is your best ally and we encourage you to contact them when you need to so you can make informed decisions about your financial future.

Still don’t have an advisor? Make the first step towards your financial future!